Louisiana Third Circuit Holds Accident Medical Expense Benefit Provision Ambiguous

Case: Csaszar v. National Casualty Company, et al.
Louisiana Third Circuit Court of Appeal
Case No. 14-1273, (La. App. 3 Cir. 11/04/15), 2015 La. App. LEXIS 2153

A nine-year-old struck in the mouth by a baseball hit by a coach during practice required extensive treatment and would require future treatment and surgeries as he grew older. After suit was filed, the liability insurer of the sports league, Nationwide Life Insurance Company, moved for summary judgment claiming it was only liable for expenses incurred within three years of the date of the accident. The Accident Medical Expense Benefit provision in the Nationwide policy provided that “if, as a result of injury, an insured incurs covered expenses starting within 90 days from the date of the accident causing the injury, we will pay . . .all covered expenses incurred within 3 years from such date.” The parties disputed the meaning of “incurred.” Nationwide argued the policy clearly and unambiguously limited coverage to expenses for treatment received during the coverage period of three years as stated in the policy and any expenses for treatment received thereafter were not covered. Plaintiffs, on the other hand, argued that because the nine-year-old’s injuries manifested themselves within the period provided for in the Nationwide policy, he obtained a diagnosis and recommended course of treatment from a physician, and because he was medically unable to obtain the remainder of his medical treatment within the three year period, all of the related medical expenses (even those after the three year period) were incurred during the coverage period.

Although the Louisiana Supreme Court held in Hoffman v. Travelers Indem. Co. of America, 13-1575, (La. 5/7/14), 144 So.3d 993, that “expenses are incurred within medical payments coverage only when one has become obligated to pay for them,” the Third Circuit found Hoffman distinguishable because the Supreme Court was defining “incurred” in a different context and as Hoffman did not involve a recommended course of treatment prior to the expiration of coverage, as did this case where the Plaintiffs would actually incur and have to pay the cost of the recommended course of treatment. The Third Circuit also found the policy ambiguous because the term "incurred" was not defined in the policy. Adhering to the rule that ambiguous contractual provisions are generally construed against the insurer and in favor of coverage, the Third Circuit concluded the record established a genuine issue of material fact regarding whether coverage was afforded under the policy, rendering summary judgment inappropriate. Accordingly, the Third Circuit held the trial court correctly denied Nationwide's motion for summary judgment and thus denied Nationwide's supervisory writ application.